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Stanford University Law School
- Securities Class Action Clearinghouse
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MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
- and -
REED R. KATHREIN (139304)
JEFFREY W. LAWRENCE (166806)
DAVID R. STICKNEY (188574)
222 Kearny Street, 10th Floor
San Francisco, CA 94108
Telephone: 415/288-4545
[Proposed] Lead Counsel for Plaintiffs
KAUFMAN, MALCHMAN, KIRBY
& SQUIRE, LLP
JEFFREY H. SQUIRE
IRA M. PRESS
919 Third Avenue, 11th Floor
New York, NY 10022
Telephone: 212/371-6600
KAPLAN, KILSHEIMER & FOX, LLP
ROBERT N. KAPLAN
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212/687-1980
WOLF POPPER LLP
LESTER L. LEVY
845 Third Avenue
New York, NY 10022
Telephone: 212/759-4600
[Proposed] Executive Committee for Plaintiffs
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
DONALD and CYNTHIA GRIMM, On Behalf of
Themselves and All Others Similarly Situated,
Plaintiffs,
vs.
RASTER GRAPHICS, INC., et al.,
Defendants.
___________________________________
No. C-98-0807-FMS
CLASS ACTION
ERIK DOWGOS, On Behalf of Himself and All
Others Similarly Situated,
Plaintiff,
vs.
RASTER GRAPHICS, INC., et al.
Defendants.
___________________________________
No. C-98-0938-FMS
CLASS ACTION
DATE: June 5, 1998
TIME: 10:00 a.m.
CTRM: 6 (Honorable Fern M. Smith)
MOVANTS' MOTION TO BE APPOINTED LEAD PLAINTIFFS PURSUANT TO SECTION
21D(a)(3)(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND APPROVAL
OF LEAD PLAINTIFFS' CHOICE OF COUNSEL
I. INTRODUCTION
II. PROCEDURAL BACKGROUND
III. MOVANTS ARE ENTITLED TO APPOINTMENT AS LEAD PLAINTIFFS
A. Movants Have A Very Substantial Financial Interest In The Relief Sought By The Class
B. The Movants Are Qualified Under Rule 23
1. Movants' Claims Are Typical Of The Claims Of The Class
2. Movants Will Fairly And Adequately Represent The Interests Of The Class
IV. THIS COURT SHOULD APPROVE MOVANTS' CHOICE OF COUNSEL
V. CONCLUSION
TO: ALL PARTIES AND THEIR COUNSEL OF RECORD HEREIN
NOTICE IS HEREBY GIVEN that on June 5, 1998, at 10:00 a.m., or as soon thereafter as this motion may be heard before the Honorable Fern M. Smith in Courtroom 6 of this Court, located at 450 Golden Gate Avenue, San Francisco, California,(1) movants (collectively, "Movants" or the "Raster Graphics Plaintiff Group"), who are members of the class of defrauded purchasers of Raster Graphics Corporation ("Raster Graphics" or the "Company") common stock between October 20, 1997 and April 3, 1998 ("Class Period")(2) will, and hereby do, move this Court for an order granting the Movants' Motion to Be Appointed Lead Plaintiffs and Approval of Lead Plaintiffs' Choice of Counsel.
This motion is brought pursuant to §21D of the Securities Exchange Act of 1934 ("Exchange Act") on the grounds that Movants have timely filed and are the "most adequate plaintiffs." In addition, Movants seek the Court's approval of their selection of Milberg Weiss Bershad Hynes & Lerach LLP as Lead Counsel and the appointment of Kaufman, Malchman, Kirby & Squire LLP, Kaplan, Kilsheimer & Fox, LLP and Wolf Popper LLP as members of the Plaintiffs' Executive Committee for the class pursuant to §21D(a)(3)(B)(v), 15 U.S.C. §78u-4(a)(3)(B)(v).
This Motion is based upon this Notice, the accompanying Memorandum of Points and Authorities, the Lawrence Decl., the pleadings and other files and records in each of these actions, and such other written or oral arguments as may be permitted by the Court at the hearing on this Motion.
Presently pending in this district are three related securities class action lawsuits:
Abbreviated Case Name Case Number Date Filed
1. Grimm, et al. v.
Raster Graphics, et al. C-98-0807-FMS 03/02/98
2. Dowgos, et al. v.
Raster Graphics, et al. C-98-0938-FMS 03/10/98
3. Moore, et al. v.
Raster Graphics, et al. C-98-1489-SBA 04/13/98
The plaintiffs in each of these actions allege violations of the Exchange Act and Rule 10b-5 promulgated thereunder, on behalf of purchasers of Raster Graphics common stock during the Class Period. They constitute all plaintiffs who have filed related actions in this District to date.(3) Movants submit this memorandum in support of their motion for: (a) the appointment of all Movants as Lead Plaintiffs; and (b) approval of the Movants' choice of counsel to represent the class in the above-related actions and any other actions that may be consolidated therewith. Movants have a very substantial financial interest in the relief sought by the class.
Section 21D of the Exchange Act sets forth the procedure for the selection of lead plaintiffs to oversee class actions brought under the federal securities laws. Specifically, §21D(a)(3)(A)(i) provides that, within 20 days after the date on which a class action is filed under the Private Securities Litigation Reform Act of 1995 ("PSLRA"),
the plaintiff or plaintiffs shall cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class --
(I) of the pendency of the action, the claims asserted therein, and the purported class period; and
(II) that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class.
15 U.S.C. §78u-4(a)(3)(A)(i).
Further, §21D(a)(3)(B) of the Exchange Act directs the Court to consider any motions by plaintiffs or other class members to serve as lead plaintiffs in response to any such notice by the latter of (a) 90 days after the date of publication; or (b) as soon as practicable after the Court decides any pending motion to consolidate any actions asserting substantially the same claim or claims. Under this section of the Exchange Act, the Court "shall" appoint the "most adequate plaintiff" and is to presume that the "most adequate plaintiff" to serve as lead plaintiff is the person, or group of persons, that
(aa) has either filed the complaint or made a motion in response to a notice . . . ;
(bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and
(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.
Section 21D(a)(3)(B)(iii), 15 U.S.C. §78u-4(a)(3)(B)(iii) (emphasis added). Movants have timely filed their motion for appointment as Lead Plaintiffs. The Movants collectively purchased 162,099 shares of Raster Graphics stock during the Class Period and have suffered $357,510 in losses.(4) See Lawrence Decl., Charts, Exs. C and D.
Movants therefore have a very substantial financial interest in the relief sought by the class. Movants also satisfy the requirement of Rule 23 of the Federal Rules of Civil Procedure because their claims are typical of the claims of the class, and they will fairly and adequately represent the interest of the class, since their interests are clearly aligned with the members of the class, and they have retained experienced class counsel to represent the class.
Accordingly, Movants are "the most adequate plaintiff," as defined in the PSLRA, and bring this motion seeking that all Movants be appointed Lead Plaintiffs.
The Movants also seeks the Court's approval of the Raster Graphics Plaintiff Group's choice of Milberg Weiss Bershad Hynes & Lerach LLP as Lead Counsel and Kaufman, Malchman, Kirby & Squire LLP, Kaplan, Kilsheimer & Fox, LLP and Wolf Popper LLP as members of Plaintiffs' Executive Committee. See firm résumés, Lawrence Decl., Exs. E-H.
On March 2, 1998, the Grimm action was filed. Pursuant to §21D(a)(3)(A)(i) of the Exchange Act, plaintiffs in Grimm published the required early notice to class members on March 3, 1998 on Business Wire, whereby it advised purchasers of the pendency of the Grimm class action. See Lawrence Decl., Ex. I.
The Exchange Act, as amended by the PSLRA, requires early notice to advise class members of their right to move this Court to be appointed Lead Plaintiffs within 60 days of publication. The statute further provides that, "not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class." Movants have timely filed this Motion pursuant to PSLRA §21D(3)(B)(i) prior to the expiration of the 60-day period from the publication of the Grimm notice.(5)
The "most adequate plaintiff" provision of the PSLRA provides that a court
shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members (hereafter in this paragraph referred to as the "most adequate plaintiff") in accordance with this subparagraph.
Section 21D(a)(3)(B)(i) (emphasis added). Moreover, the Exchange Act, as amended by the PSLRA, requires a court to adopt a rebuttable presumption
that the most adequate plaintiff in any private action arising under this chapter is the person or group of persons that --
* * *
(aa) has either filed the complaint or made a motion in response to a notice under subparagraph (A)(i);
(bb) in the determination of the court, has the largest financial interest in the relief sought by the class . . . .
Section 21D(a)(3)(B)(iii)(I) (emphasis added). Thus, a "member or members" of the class or a "person or group of persons" may combine to constitute "the largest financial interest" and thereby jointly serve as the "most adequate plaintiff." Id.; see In re Read-Rite Corp. Sec. Litig., No. C-97-20059-RMW, Order at 4-5 (N.D. Cal. May 28, 1997) (Lawrence Decl., Ex. J); In re Diamond Multimedia Sys., Inc. Sec. Litig., No. C 96-2644 SBA, Order at 2-4 (N.D. Cal. Jan. 13, 1997) (proposed lead plaintiffs can pool together their shares to form the largest financial interest) (Lawrence Decl., Ex. K).(6)
During the Class Period, Movants collectively purchased more than 162,000 shares of Raster Graphics stock at prices artificially inflated by defendants' false and misleading statements and have collectively suffered over $357,000 in losses.(7) See Lawrence Decl., Ex. D.
Movants are qualified to represent the proposed class and, if they have the largest financial interest in the relief sought by the class, are presumed to be the most adequate plaintiff. Additionally, each Movant has signed and filed a sworn certification of his or her review of the Complaint and authorization of its filing and is willing to serve as a representative party on behalf of the class. In addition, the Movants have selected and retained counsel highly experienced in prosecuting securities class actions such as this to represent it. See the firm résumés of Milberg Weiss Bershad Hynes & Lerach LLP, Kaufman, Malchman, Kirby & Squire LLP, Kaplan, Kilsheimer & Fox LLP and Wolf Popper LLP, Lawrence Decl., Exs. E-H.
Therefore, the Raster Graphics Plaintiff Group satisfies the prerequisites for appointment as Lead Plaintiffs pursuant to §21D(a)(3)(B).
B. The Movants Are Qualified Under Rule 23
Section 21D(a)(3)(B)(iii)(I)(cc) of the Exchange Act further provides that, in addition to possessing the largest financial interest in the outcome of the litigation, the lead plaintiff or plaintiffs must also "otherwise satisf[y] the requirements of Rule 23 of the Federal Rules of Civil Procedure." With respect to the qualifications of the class representative, Rule 23(a) requires that the claims be typical of the claims of the class and that the representative will fairly and adequately protect the interests of the class.
As detailed below, each of the Movants satisfies the typicality and adequacy requirements of Rule 23(a), thereby justifying their appointment as Lead Plaintiffs.
The typicality requirement of Rule 23(a)(3) is satisfied when the proposed lead plaintiffs: (a) have suffered the same injuries as the absent class members; (b) as a result of the same course of conduct by defendants; and (c) their claims are based on the same legal issues. Milonas v. Williams, 691 F.2d 931, 938 (10th Cir. 1982); Shields v. Smith, [1992 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶97,001, at 94,376 (N.D. Cal. Aug. 18, 1992); In re Activision Sec. Litig., 621 F. Supp. 415 (N.D. Cal. 1985). The questions of law and fact common to the members of the class which predominate over questions which may affect individual class members include the following:
(a) Whether the federal securities laws were violated by defendants;
(b) Whether defendants omitted and/or misrepresented material facts;
(c) Whether defendants knew, had reason to know or recklessly disregarded that their statements were false and misleading or failed to have a reasonable basis for those statements;
(d) Whether the price of Raster Graphics stock was artificially inflated during the Class Period; and
(e) The extent of damage sustained by class members and the appropriate measure of damages.
There is a well-defined community of interest in the questions of law and fact involved in this case. Thus, the claims asserted by the Movants are typical of the claims of the members of the proposed class. The gravamen of Movants claims are similar to the members of the class, in that they arise out of defendants' public dissemination of a series of false and misleading statements about Raster Graphics during the Class Period. Each of the Movants acquired Raster Graphics stock at prices inflated by defendants' misrepresentations and omissions and was damaged thereby. Typicality exists here because Movants' claims are based on the same legal theory and arise "from the same event or course of conduct giving rise to the claims of other class members." In re United Energy Corp. Solar Power Modules Tax Shelter Inv. Sec. Litig., 122 F.R.D. 251, 256 (C.D. Cal. 1988); accord Blackie v. Barrack, 524 F.2d 891, 902-03 & n.19 (9th Cir. 1975).
Movants interests are clearly aligned with the members of the proposed class, and there is no antagonism between the interests of these individuals and the proposed class members. As detailed above, Movants share substantially similar questions of law and fact with the members of the proposed class, and their claims are typical of the members of the class. Movants have amply demonstrated their adequacy as class representatives by signing certifications, filed with the Court, affirming their willingness to serve as and assume the responsibilities of class representatives. In addition, the Movants have selected counsel highly experienced in prosecuting securities class actions such as this to represent it.
The PSLRA vests authority in the lead plaintiffs to select and retain counsel, subject to court approval. See §21D(a)(3)(B)(v). Thus, the Court should not disturb the lead plaintiffs' choice of counsel unless "necessary to protect the interests of the plaintiff class." See 141 Cong. Rec. H 13691, 104th Cong., at H13700 (Nov. 28, 1995). Movants have selected the law firms of Milberg Weiss Bershad Hynes & Lerach LLP to serve as Lead Counsel, and Kaufman, Malchman, Kirby & Squire LLP, Kaplan, Kilsheimer & Fox, LLP and Wolf Popper LLP as members of Plaintiffs' Executive Committee. These firms possess extensive experience in the area of securities litigation and have successfully prosecuted numerous securities fraud class actions on behalf of injured investors. See Lawrence Decl., Exs. E-H. Thus, the Court may be assured that, in the event the instant motion is granted, the members of the class will receive the highest caliber of legal representation available.
For all the foregoing reasons, Movants respectfully request that the Court: (a) appoint them as Lead Plaintiffs in the above-captioned actions, pursuant to §21D(a)(3)(B); and (b) approve their choice of Milberg Weiss Bershad Hynes & Lerach LLP as Lead Counsel and Kaufman, Malchman, Kirby & Squire LLP, Kaplan, Kilsheimer & Fox, LLP and Wolf Popper LLP as members of Plaintiffs' Executive Committee.
DATED: May 4, 1998
Respectfully submitted,
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
REED R. KATHREIN
JEFFREY W. LAWRENCE
DAVID R. STICKNEY
______________________________
JEFFREY W. LAWRENCE
222 Kearny Street, 10th Floor
San Francisco, CA 94108
Telephone: 415/288-4545
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
[Proposed] Lead Counsel for Plaintiffs
KAUFMAN, MALCHMAN, KIRBY
& SQUIRE, LLP
JEFFREY H. SQUIRE
IRA M. PRESS
919 Third Avenue, 11th Floor
New York, NY 10022
Telephone: 212/371-6600
KAPLAN, KILSHEIMER & FOX, LLP
ROBERT N. KAPLAN
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212/687-1980
WOLF POPPER LLP
LESTER L. LEVY
845 Third Avenue
New York, NY 10022
Telephone: 212/759-4600
[Proposed] Executive Committee for Plaintiffs
RASTER-G\BM000433.BRF
DECLARATION OF SERVICE BY MAIL
PURSUANT TO NORTHERN DISTRICT LOCAL RULE 23-2(c)(2)
I, the undersigned, declare:
1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of San Francisco, over the age of 18 years, and not a party to or interested in the within action; that declarant's business address is 222 Kearny Street, 10th Floor, San Francisco, California 94108.
2. That on May 4, 1998, declarant served the MOVANTS' MOTION TO BE APPOINTED LEAD PLAINTIFFS PURSUANT TO SECTION 21D(a)(3)(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND APPROVAL OF LEAD PLAINTIFFS' CHOICE OF COUNSEL by depositing a true copy thereof in a United States mailbox at San Francisco, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List and that this document was forwarded to the following designated Internet site at:
http://securities.milberg.com
3. That there is a regular communication by mail between the place of mailing and the places so addressed.
I declare under penalty of perjury that the foregoing is true and correct. Executed this 4th day of May, 1998, at San Francisco, California.
______________________________
DEBORAH R. DASH
1. Movants have made this motion in each of the three related cases that have been filed. See infra at 2. Given that Grimm and Dowgos have been related and that all of the cases should be consolidated, movants believe that the only hearing on this motion will be in the consolidated case in Grimm before the Honorable Fern M. Smith. Nevertheless, because Moore has not yet been related or consolidated with Grimm and Dowgos, movants have set the motion in that case before the Honorable Saundra Brown Armstrong, to be heard on June 9, 1998.
2. On March 4, 1998, Darren Ginter filed a class action complaint in Santa Clara County Superior Court alleging that he and others were defrauded in connection with their purchases of Raster Graphics common stock (Ginter, et al. v. Raster Graphics, et al., Case No. CV772401). A copy of the Ginter complaint is attached as Exhibit A to the Declaration of Jeffrey W. Lawrence filed herewith ("Lawrence Decl., Ex. _"). That Complaint alleges a class period from April 24, 1997 through February 3, 1998. The Ginter action arises out of the same facts and circumstances as alleged in the three federal complaints, and Movants believe that the Class Period in the federal actions should be extended to also commence on April 24, 1997. Movants have filed certifications for purchasers in the entire period, April 24, 1997 through April 3, 1998 (Lawrence Decl., Ex. B). Movants' losses for purchases in the current federal Class Period total $357,510 (Lawrence Decl., Ex. D). Losses for purchases in the period preceding the federal Class Period (April 24, 1997 through October 19, 1997) total $135,920 (Lawrence Decl., Ex. C), for an aggregate total of $493,430. Movants believe that these losses will be included in a consolidated complaint in this action. All purchasers join movants in making the present motion.
3. All of these cases arise out of substantially the same facts and circumstances and should be consolidated for all purposes under Fed. R. Civ. P. 42. Under §21D(a)(B)(ii) of the PSLRA, the Court should rule on the consolidation and then decide the appointment of lead plaintiffs.
4. Including the purchases in the Ginter period brings the total number of shares to 188,964 and the aggregate losses to $493,430.
5. A member of the class seeking appointment as Lead Plaintiff need not file a complaint but may seek appointment merely by filing a motion. See, e.g., §21D(3)(B)(i) ("the court shall consider any motion made by a purported class member who is not individually named as a plaintiff in the complaint or complaints").
6. See also Malin v. IVAC Corp., No. 96-1843-CIV-Moreno, Order at 4-8 (S.D. Fla. Nov. 1, 1996) (holding the plaintiff group with the largest number of shares is the most adequate plaintiff under the PSLRA) (Lawrence Decl., Ex. L); Zuckerman v. Foxmeyer Health Corp., No. 3:96-CV-2258-T, Order at 5 (N.D. Tex. Mar. 28, 1997) (11 individual plaintiffs with the largest financial interest collectively appointed lead plaintiff) (Lawrence Decl., Ex. M); Chan v. Orthologic Corp., No. Civ. 96-1514-PHX(RCB), Order at 13 (D. Ariz. Dec. 19, 1996) (plaintiffs from five separate actions collectively appointed lead plaintiff) (Lawrence Decl., Ex. N); Powers v. Eichen, Civ. No. 96-1431-B(AJB), Order at 1 (S.D. Cal. Nov. 15, 1996) (nine individual plaintiffs collectively appointed lead plaintiff) (Lawrence Decl., Ex. O).
7. The inclusion of the purchases in the Ginter Class Period, see n.2, supra, adds another 26,865 shares and $135,920 in losses (Lawrence Decl., Ex. C), bringing the aggregate to $493,430.